Fountain Residential Partners News

Student Apartments Arms Race

If your college dorm was more like a tenement than lux living, the latest student housing projects will be a surprise.

A growing apartment building niche is providing thousands of new rental units for college students that offer everything from fitness centers to resort-style swimming pools.

“We call it the amenities arms race,” said Brent Little, CEO of Dallas-based Fountain Residential Partners. “The projects are offering more and more. There are lazy river water features at the pools. And you can’t build a fitness center that’s big enough.”

Fountain Residential has built a dozen student rental projects since 2010 in locations across the country. The company just started work on its latest deal, a 297-unit project at the University of Texas at Arlington called 8FOUR8 Mitchell.

“We don’t have a cookie-cutter design,” Little said. “The project we did in Bozeman, Montana, looks completely different from the one in Arlington. Each one is designed specifically for that market.”

Student housing has been a booming development sector.

“Student housing deliveries in this cycle peaked at about 60,000 beds annually in 2013-2014,” said Greg Willett, chief economist with Richardson-based RealPage. “From there, some slowing to about 45,000 to 50,000 beds annually occurred in 2015-2016.”

RealPage expects new housing for another 40,000 students this year and again in 2018.

“The industry has grown leaps and bounds and is attracting a lot of capital,” said Fountain Residential’s Trevor Tollett. “We do a lot of work in Texas because there are a lot of universities in Texas.”

The developer has done projects at TCU, the University of North Texas, the University of Houston and the University of Texas at San Antonio.

“They look just like any apartment complex you see in Uptown,” Tollett said. “Everything comes fully furnished, and everything is leased by the bedroom. All the utilities are included.”

Tollett said most of his firm’s projects have predominantly four-bedroom units that students share. Each bedroom has its own bath, and there’s a common kitchen and living area.

“Most of the renters come in twos or fours with their friends in a group,” Little said. “We also have a roommate matching questionnaire that’s a work of art.”

The days of vinyl floors and institutional-quality furniture in college housing is long gone.

Fountain Residential’s project on Mitchell Street across from UTA will replace an older apartment complex and small office buildings. It should be ready for students in the fall of 2019. The housing will start at $799 a month for a bedroom in a shared unit or $1,380 for a one-bedroom unit.

“We build everything from efficiencies to five-bedroom, five-bath units,” said Fountain Residential’s Jon Clayton. “Our micro units [350 square feet] are some of the first ones to lease up.”

Fountain Residential scouts the market for locations as close to the college campus as it can get.

“The properties that have had the highest rent growth and best occupancy year after year are the ones closest to campus,” Little said. “It’s the university equivalent to beachfront property.”

The company started seven years ago, with Dallas’ Westcott family providing equity for deals.

“Being small and nimble, we don’t have a high overhead,” Little said. “We only have to do two or three projects a year to maintain profitability. We are looking at 200-plus markets around the country for potential projects.”